German private sector growth slows to near four-year low: PMI

BERLIN (Reuters) - Activity in Germany’s services sector eased in November due to rising cost pressures and waning business optimism, slowing growth in the private sector of Europe’s largest economy to a near four-year low, a survey showed on Wednesday.

IHS Markit’s final composite Purchasing Managers’ Index (PMI), which tracks the manufacturing and services sectors that account for more than two-thirds of the economy, fell to 52.3 from 53.4 the previous month.

The reading was still above the 50 line that separates growth from contraction, however, and came in slightly better than a preliminary estimate published last month.

The economy is expected to post moderate growth in the fourth quarter after a contraction in the third, but the drop in the PMI figures in November casts doubt over the strength of any rebound, IHS Markit economist Phil Smith said.

In the services sector, business activity growth slowed to 53.3 in November from 54.7 the previous month, with new business from abroad falling for the fifth month in a row and business optimism slipping to the lowest level in two years.

Services firms reported the steepest rise in input prices for over seven-and-a-half years in November, reflecting higher costs for transport, labor and energy, Markit said.

The government predicts gross domestic product growth of 1.8 percent this year and next. This would be below the calendar-adjusted 2.5 percent reached last year, which was the strongest growth rate since 2011.